Unangelic Knaves and Projective Paternalists

Every lover of liberty knows that that government is best which governs least (Locke, Jefferson, Thoreau). We also know that when designing human institutions, especially those compulsory monopolies called governments, every person must be considered a knave (Hume) because if all people were angels we would have no need for government at all (Madison).

Libertarians now also need to consider the implications of the findings of a more recent wave of thinkers, specifically experimental economists Sandro Ambuehl, B. Douglas Bernheim, and Axel Ockenfels.

In their new working paper, “Projective Paternalism,” brought to my attention by Ambuehl after Al Roth told him about my recent post here on the Golden Rule, the trio show experimentally what I suggested in that post, that many people readily impose their own preferences on others without hesitation or compunction, even when they can communicate freely with the party being imposed upon. I am no expert when it comes to the methodology of experimental economics, but the work appears to be extremely thorough and very thoughtfully done.

What do their findings mean for libertarians? First, it ought to stimulate more research into why individuals sort along the conservative-liberal spectrum, with, alas, relatively few embracing classical liberalism.

Clearly, there is a strong bias for statist worldviews, left or right, and scholars need to figure out the degree to which that bias is genetic and the degree to which it is cultural. The first step, I think, would be to conduct replication studies on subjects from countries other than Germany. If the results are broadly similar across a large number of countries, we might have to start looking for a “statism gene.” If results vary from country to country, then we can start to look at socialization mechanisms like education, religion, parenting styles, and so forth.

Once we know the root causes of projective paternalism, we can begin to search for ways to reduce its incidence, which should eventually equate into more-rational public policies.

In the meantime, classical liberals need to start thinking in terms of limiting the influence of projective paternalists over public policy in the same way that they try to keep power out of the hands of unangelic knaves. For example, libertarians might be able to establish the notion that policy makers should actively seek out and survey the views of the people ostensibly helped by some new policy.

That might sound pricey, but it would create huge savings if supposed victims cannot be readily identified, or if they find the proposed intervention unhelpful after the implications of the policy are fully explained to them.

For example, workers impacted by a proposed increase in the minimum wage should be asked if they would like to earn a minimum of $15/hour but at the risk of never finding work again. Or, would they prefer always to be able to find work but at a wage that they would have to negotiate with their prospective employer?

But libertarians need to realize that projective paternalists are not easily persuaded by reason. Projective paternalists would not do X, so they do not think that Y should do X, even if Y says s/he wants to do X, or even if evidence proves that banning X reduces welfare. That is why even the most thoughtful and careful explanations of the microeconomics of rent controls, usury caps, and so forth often fall flat.

Classical liberals need to test the extent to which projective paternalists can be persuaded that their projections, once called out to them, are authoritarian and immoral. In another recent post, I suggested that some liberals may have enough sense to see the anti-democratic implications of their projective biases.

Experimentalists should test that hypothesis, and to the extent it is true, lovers of liberty need to increase their efforts to remind democratically minded statists of the dangers inherent in the tyranny of the majority — that is, to impress upon them the hypocrisy of extolling voting while exhibiting a willingness to force others to behave in ways contrary to their wishes. That sort of behavior, after all, is what democracy was supposed to prevent in the first place.

Robert E. Wright is the Nef Family Chair of Political Economy at Augustana University in Sioux Falls, South Dakota. He is the author of 18 books, including a new book on financial exclusion forthcoming from AIER in August 2019.